Opposition Workers' Party has scored a stunning victory in Singapore's Punggol East by-election, a seat considered a stronghold of the ruling People's Action Party (PAP).

Workers' Party candidate Lee Li Lian, 34, a middle-class corporate trainer, took almost 54 percent of the votes cast over PAP candidate Koh Poh Hoon's 43 percent in a four-cornered contest.

Returning officer Yam Ah Mee announced that Lee had taken a total of 16,038 votes, while Koh, 40, a prominent surgeon, bagged 12,856 votes.

Meanwhile, two other opposition parties candidates - Singapore Democratic Alliance's Desmond Lim (168 votes) and and Reform Party chief Kenneth Jeyaretnam (353 votes) both forfeited their election deposit.

Workers' Party candidate Lee Li Lian singapore by-electionLee (left in photo) makes history as the second elected female oppostion MP in post- independence Singapore, and first in single-seat ward.

PAP, which has been in power for more than 50 years, was trounced by the opposition party following a campaign dominated by issues such as the rising cost of living and widening income gaps.

The Punggol East by-election is the second PAP defeat since the May 2011 general elections when the ruling party's share of popular votes fell to an all-time low of 60 percent.

PAP was earlier rebuffed by voters at a by-election last May in the opposition stronghold of Hougang.

However, it still controls 80 of the 87 seats in Parliament, where most seats are elected in clusters. All the seven opposition seats are held by Workers' Party.

Setback despite promises of more reforms

Today's vote was called to fill a seat left empty when speaker Michael Palmer stepped down and quit the PAP in December after he confessed to an extramarital affair.

lee hsien loongIn an immediate reaction, Prime Minister Lee Hsien Loong (left) thanked the people for voting the PAP candidate, "but unfortunately not enough to win".

"In by-election, government has more difficult fight because people see it as electing a MP, not a new government. We will field KPK (Koh Poh Hoon) in future GE," he said in a text message.

"Now we will refocus on national issues: White Paper on population and Budget 2013. Let us come together and work for a better Singapore.

"The PAP will continue to work to improve the lives of Singaporeans, and present our report card for voters to judge in the next general elections."

Voters have delivered PAP a fresh rebuke despite promises of more reforms to appease a restive electorate.

The next general election in Singapore is expected to be held in 2016.

- Agencies